volst

The market does not necessarily rise or fall, it will definitely fluctuate

[Andy Constan @dampedspring]

Convert 101

$MSTR. A lot has been said about the terms of the convert. It missed the point imho

The convert has a zero coupon and a call on MSTR stock at a 55% premium to spot on issue date

Is that a stupid thing to buy. The question is what is its relative value not what is its absolute value. Its relative value needs to be assessed vs other possible investments in MSTR capital structure and expectations of future volatility of MSTR as a company.

I'll keep it basic

Having spent most of my early career trading, pricing, underwriting and inventing convertible bonds of all sorts I have some experience in this space.

Let's start here. What is a convert will simply it's a corporate bond stapled to a long term call option on the stock of the company.

Let's break the MSTR convert down.

It's a zero coupon bond maturing in 5 years + a 5 year call struck at 672.40

Ok. What's the zero coupon bond worth. Well let's assume a 5 year bond priced to be worth 100 would need a coupon of 8%. In that case the zero coupon is worth 68%

That means if one bought the concert at 100% they implicitly bought the call option at 32%

68% + 32%. Is 100 which makes the concert fairly priced in a relative sense.

It's up to you to decide if 8% is the correct corporate bond yield and 32% is the correct call value.

But this is how you decide.

FWIW the 2.2 year 670 call is priced at 32% in the options market so if anything the 8% coupon assumption is too low.

Anyway that's relative value. I think the convert is pretty cheap to be honest in relative value and I would likely have bought it in prior lives. However is it absolutely cheap. In that case it depends on the price of the shares. In my view the share price is massively overvalued and absolutely rich. So for me to buy the convert I would want to extract its relative value as its absolute value sucks almost as bad as the stock. To do that I would buy the convert and short the stock. Because many hedge funds are willing to do this trade selling 3BN was no biggie. But the convert wasn't hard to sell what was hard is to get common stock holders to buy from hedge funds who want to short at an absolutely high price

[The Kobeissi Letter @KobeissiLetter]

Everyone is talking about, MicroStrategy, $MSTR:

The stock is up more than EVERY S&P 500 component in 2024 with just $116 million in quarterly revenue.

In fact, $MSTR is now up nearly TRIPLE as much as Nvidia YTD.

What is MicroStrategy doing and is it a bubble?

(a thread)

[volst @VolstTrading]

If I think bitcoin will go up, it's more favorable to go long $MSTR

[Jack Farley @JackFarley96]

Out now - volatility trader @Ksidiii on:

- why short vol trades will have their "graveyard day" 🪦

- what **really** drove the August 5 market crash 📉

- much more!

Apple 🔊https://t.co/eAnMPRtoku
Spotify 🔊 https://t.co/gxvZ0aZoB6
YouTube 📽️https://t.co/BURBuUYW7y

[Michael Rouben @mrouben]

CANADIAN KITTIES: MONTHLY THREAD - AUGUST 2024

[Bob Elliott @BobEUnlimited]

Interesting to see insiders with the most bearish flows in a decade.

Maybe just profit taking, or maybe they realize that current pricing is extreme relative to conditions.

[volst @VolstTrading]

The current decline in the stock market is just a case of overcrowding on the long side, and the official downtrend has not yet begun

[volst @VolstTrading]

At this point there is not much room to continue long VIX, shorting is more profitable!

[Juan Ortiz 🗳️👁‍🗨 @Juan_OrtizMX]

🗳️📌REFORMA DE 40 HORAS SEMANALES NO ES PRIORITARIA Y NECESITA CONSENSO CON EMPRESARIOS: SHEINBAUM

Claudia Sheinbaum declaró en conferencia de prensa que la reforma para reducir la jornada laboral a 40 horas semanles no es una prioridad inmediata para su gobierno.

Mencionó que su gobierno se centrará primero en las 18 reformas constitucionales y 2 legales que dejó el presidente López Obrador.

Sheinbaum aclaró que cualquier cambio en la jornada laboral requerirá un amplio consenso, pues dice que no puede implementarse sin el acuerdo de los empresarios.

Finalmente indicó que será responsabilidad del o la próxima titular de la Secretaría de Trabajo y Previsión Social buscar dichos consensos.

[volst @VolstTrading]

MAGA✊🏻

[volst @VolstTrading]

@KobeissiLetter yes

[volst @VolstTrading]

It is doubtful that leftist parties will be able to change economic policy at will when Mexico becomes the largest trading partner of the United States. It is also doubtful that the Mexican peso will continue to depreciate .

[unusual_whales @unusual_whales]

BREAKING: 43% of small businesses were unable to pay their rent in full in April due to economic headwinds.

That’s the highest rent delinquency rate since March 2021, per Bloomberg.

[volst @VolstTrading]

The probability of US government intervention in the foreign exchange market is increasing https://t.co/W507ZI73SL

[volst @VolstTrading]

Mexican peso faces appreciation trend，Super Peso📈

[volst @VolstTrading]

USDCNH📈📈📈🔥

[CN Wire @Sino_Market]

Xi Jinping has told China’s financial cadres that an active monetary policy toolkit must include more treasury bonds trade by #PBOC to inject liquidity into the economy, which has not used in more than two decades.-SCMP
https://t.co/ylcH9GudY1

[volst @VolstTrading]

@DavidInglesTV WOW

[volst @VolstTrading]

The number of bitcoins is fixed, but the variety of other digital currencies is infinite

[volst @VolstTrading]

Bitcoin shrugs off rising interest rates

[volst @VolstTrading]

@charliebilello Almost no one really cares about the deficit

[volst @VolstTrading]

@jeuasommenulle 😂